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Wouldn't the investment funds be motivated to avoid investing in these companies, the same way they are motivated to avoid investing in companies likely to cras
by fwip 2y ago
Wouldn't the investment funds be motivated to avoid investing in these companies, the same way they are motivated to avoid investing in companies likely to crash? So reducing funding (via share price) of a company at risk of the death penalty would select for safer/better companies.
Pushing the externalities back into the company is exactly the thing we want - and the fewer companies that conduct themselves like this, the better off we all are.
- chrisjj 2y ago> Wouldn't the investment funds be motivated to avoid investing in these companies, the same way they are motivated to avoid investing in companies likely to crash? But they aren't. A small probability of huge return makes likely crash a non-problem.
- ethbr1 2y agoThe difference with the proposed mechanism of action is that there would be no severance of liability at the time of equity sale. I.e. you couldn't sell off the stock, make your huge return, and avoid the consequences Subsequent litigation would claw back those same huge returns.
- chrisjj 2y agoAh, then yes, different. However this deterrent effect is unfortunately conditional on the full risk of the outcome being apparent in advance to investors and indeed investees. I fear that often it is not, as in this 3M case. This boils down to our drive for progress leading to employing new technology beyond our ability to evaluate its risk, as e.g. currently with "AI". Deterrence of that cannot be acheived at the corporate level. It is a societal problem.